MGTS7301 Chap.2 Managing Change Across Three Horizons
Managing Change Across Three Horizons
Three Horizons helps leaders sustain the current business while building transition options and exploring a successor system. Horizon 1 protects reliable operations, Horizon 2 validates adjacent capabilities and Horizon 3 works with disruptive possibilities. The chapter stresses that the horizons run at the same time and differ by strategic role, not by date alone.
Strong answers assign evidence, leadership and stopping rules to each horizon.
What this chapter covers
- 01
2.1 Horizon 1 operations and optimisation
- 02
2.2 Horizon 2 pilots and capability bridges
- 03
2.3 Horizon 3 exploration and successor systems
- 04
2.4 The five-step horizon conversation
- 05
2.5 Portfolio balance, evidence and stopping rules
Worked example · free
Place three energy initiatives
- 1Place vegetation maintenance in Horizon 1 because it protects current service reliability.
- 1Place the 200-home battery trial in Horizon 2 because it tests an adjacent capability.
- 1Place peer-to-peer market research in Horizon 3 because it explores a successor role.
- 1Assign operational metrics, pilot learning and future assumptions to the respective horizons.
- 1Explain why the three proceed concurrently with different review cadences.
Key terms
- Horizon 1
- The current system and business model, managed for reliability, efficiency and continuous improvement.
- Horizon 2
- Transition activity that validates and scales adjacent options or capabilities between present and future.
- Horizon 3
- Exploration of a future successor system under high uncertainty and possible disruption.
Managing Change Across Three Horizons FAQ
Are the horizons fixed time periods?
No. The captured slides offer time guides, but classification depends on strategic role. A short pilot may be Horizon 2, while a long efficiency program can remain Horizon 1. Ask what the initiative protects or creates.
Why manage all three horizons together?
Waiting for Horizon 1 to fail leaves too little time to learn. Concurrent management protects the current system while building transition evidence and future capability. Different horizons still require different evidence and leadership.
What is the common Horizon 2 mistake?
Teams collect pilots without deciding what capability they test or how successful evidence will scale. A bridge requires learning milestones and a path into the operating model. Otherwise experimentation becomes an activity portfolio without transition.
How should resources differ across the horizons?
Horizon 1 receives what safety and continuity require, Horizon 2 receives staged investment tied to learning milestones, and Horizon 3 receives protected exploration capacity. Equal budgets are not the goal; an explicit rationale and rebalancing rule are.
When should a Horizon 2 pilot stop?
Stop when evidence rejects the core assumption, the capability no longer connects to the desired future or the next learning step costs more than its decision value. A stopping rule protects attention and prevents attachment from becoming strategy.
What belongs in a Horizon 3 measure?
Use learning about needs, feasibility, partnerships or future conditions rather than imposing mature operating targets too early. The measure should reduce an important uncertainty and help decide whether exploration continues, changes direction or returns resources to another option.
Assessment move
Take one organisation and list three real initiatives. Classify each by what it protects or creates rather than by its deadline. Run a role test: work that improves reliability in the current model belongs in Horizon 1, work that validates an adjacent capability belongs in Horizon 2, and work exploring the successor system belongs in Horizon 3. Challenge every classification based only on months or years.
For each initiative, write the dominant uncertainty. Horizon 1 may face execution variance, Horizon 2 may face adoption or scaling risk, and Horizon 3 may face uncertainty about technology, regulation or need. Choose evidence suited to that uncertainty. Service continuity is not measured like a prototype, and a future concept should not be rejected for missing near-term revenue before its purpose is understood.
Build a resource table with an owner, cadence and stopping rule for every horizon. Ask what must be protected from short-term pressure, what pilot can be stopped, and what future assumption deserves cheap exploration. Rehearse the five-step discussion in the captured sequence: present concerns, future aspirations, inspiring practices already visible, innovations in play and essential features to retain.
Notice how placing the future before the pilots prevents the current model from narrowing every idea. Next, create a bad portfolio with all funds in Horizon 1 and explain the long-run exposure. Create another with exciting Horizon 3 concepts and neglected operations, then explain the trust and cash consequences.
In a scenario response, state why the three horizons must run concurrently and why their leaders use different mindsets. Finish on the rebalancing rule: which signal moves resources, which experiment scales and which legacy activity can decline. This closing step turns the diagram into a governance process instead of a motivational picture.
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